(Alliance News) - Aura Energy Ltd on Tuesday pleaded with shareholders not to reject key resolutions at its upcoming annual general meeting for fear that the firm would then be in default of its loan obligations.
Shares in Aura were down 8.3% at 0.28 pence in London in midday trading.
The Australian minerals firm said 14 of its shareholders have lodged "a significant negative vote" against all resolutions on the ballot at its AGM this Friday.
Should resolutions 1, 6, and 7 - which concern Aura's security facility agreement with Lind Partners LLC - fail to pass, Aura will be in default of its obligations under the facility.
Aura secured AUD2 million, about GBP1.0 million, in financing from Lind back in April. Should Aura default on its obligations, Lind can use "a number of measures available in the agreement to protect its interests", an outcome which Aura said "would be negative for the company and shareholders".
So far, Aura said around 85% of the proxies it has received so far oppose all AGM resolutions.
"A majority of the board of directors are concerned that these shareholders do not understand the ramifications of voting against the resolutions relating to the Lind security facility agreement," Aura said.
Further, the board is concerned that the 14 shareholders also rejected ratifying prior share issues. Under the rules of Aura's Australian Stock Exchange listing, it cannot place more than 15% of its securities in a 12 month period without shareholder approval.
"The failure of the company to have the prior issues of shares ratified by shareholders will virtually put the company at a standstill in its capacity to advance its projects and fund day-to-day activities as it will need to call general meetings of shareholders each time it wishes to raise new equity," Aura explained.
"Each meeting will require preparation of a notice of meeting, approval of the ASX, printing and despatch of the notice of meeting to every shareholder and, under new listing rules, the attendance of the company's share registrar to conduct polls on resolutions relating to the listing rules. This outcome will be time-consuming and add significantly to operating costs," Aura added.
The majority of Aura's directors have requested that shareholders who have yet to vote "do so with urgency" and approve all resolutions. Proxy voting closes Wednesday this week.
By Anna Farley; annafarley@alliancenews.com
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Aura Egy (AURA)